OilMin cancels RGTIL's permits for 4 gas pipelines

October 10, 2012 14:28 IST

The Oil Ministry has cancelled permits issued to billionaire Mukesh Ambani's privately owned RGTIL for laying four natural gas pipelines, saying there were inordinate delays in construction of the 2,175-km lines.

"Orders cancelling authorisation issued to Reliance Gas Transportation Infrastructure Ltd for laying of four pipelines from Kakinada in Andhra Pradesh to Howrah in West Bengal, Chennai and Tuticorin in Tamil Nadu and Mangalore in Karnataka were issued last week," a source said.

However, the letter cancelling the permit could not be served on RGTIL in the first instance because of incorrect/incomplete address and a new letter was sent.

RGTIL, whose bank guarantees totalling Rs 80 crore (Rs 800 million) that were pledged as collateral for executing the pipelines, expired last year and the ministry has asked the firm to furnish fresh securities of the like amount which the government will forfeit for failure to lay the pipeline, he said.

The ministry refused to buy RGTIL's argument that the government has already allocated all of the projected mmscmd of gas output from the KG-D6 fields to customers in Andhra Pradesh, Maharasthra and other northern states, leaving no gas for transportation through its proposed pipelines from Kakinada

to Howrah, Chennai, Tuticorin and Mangalore.

Sources said the ministry, which had in 2007 made it a condition that RGTIL cite a source of gas before it is given license or authorisation to lay the pipelines, has not agreed with the the company's assertion that in absence of any gas allocation the pipelines will be infructuous investment.

The ministry also rejected the firm's assertion that it has done all ground work including route survey, pre-engineering and acquisition of right of use and it would start work the moment government identifies a source of gas that would feed the pipelines.

The pipelines, RGTIL had asserted, would be ready one month before the source or field is ready to deliver the gas.

Sources said the ministry based its decision on a recommendation made by the oil regulator, Petroleum and Natural Gas Regulatory Board.

Relogistics Infrastructure Ltd (Relog), a subsidiary of RGTIL, had in 2007-08 won government authorisation to lay Kakinada-Basudebpur-Howrah pipeline, Kakinada-Chennai line, Chennai-Bengaluru-Mangalore pipeline and ChennaiTuticorin line but work on these pipelines hasn't yet started.

Relog cited uncertainty about availability of gas for not building the lines in the 3 year timeline specified in the 2007 authorisation.